Today the CRA released a new Application Policy concerning the treatment of government and non-government assistance as it relates to the SR&ED. The paper makes a strong statement on the CRA’s position that projects that government assistance is applied on a project by project basis, and that the value of any individual project can never be reduced below zero.

Per the release “This application policy outlines the position of the Canada Revenue Agency (CRA) relating to government and non-government assistance and its impact on the expenditures for scientific research and experimental development (SR&ED) carried out in Canada, as well as on the qualified expenditures for the purposes of calculating the SR&ED investment tax credit (ITC). It also replaces and cancels Application Policy 2000-03, Government Assistance - Treatment of Provincial and Territorial R&D Assistance.

This application policy should be read in conjunction with the current version of interpretation bulletins IT-273 [1], Government Assistance - General Comments, and IT-151 [2], Scientific Research and Experimental Development Expenditures.” Application Policy SR&ED 2005-02 General Release Concerning the Treatment of Government and Non-Government Assistance [3].